Christine Poole Innergex Renewable Energy INE-T BUY ON WEAKNESS Sep 14, 2021

Produces green power. Likes it. Trades at much higher multiples than Polaris. Would chose Polaris in the sector, but INE is a solid player in the sector.

INE has been closely tracking to the broader 'clean energy' industry (PBW as a proxy). The PBW ETF peaked in early 2021 as 'green' stocks flourished, but the ETF and industry has since made a new 52-week low. The stock is a $2.1B company that has demonstrated strong top-line growth and a decent amount of free cash flows. It pays a solid yield of 7%, but is highly leveraged, with a net debt of $5.9B. It trades at an OK valuation of 2.0X forward sales and 1.9X book. A lot of high growth, unprofitable names have been impacted recently with renewed recession fears as bond yields spike and inflation re-accelerated in recent readings. We would like to see the company achieve profitability, and we feel that this could help support its share price, particularly as it grows its top-line at a strong rate.
Unlock Premium - Try 5i Free

Tough, down about half. Lots of money was chasing few investment outlets, and that bid up the multiples of all green energy. Valuation changed dramatically, further compounded by rising interest rates. Operating weakness. Steer clear. 

If you own it, hard to exit at a 50% loss. You need to do something at some point. More recovery potential than others. Other income opportunities out there with less risk. 

This is how he'd play the renewable energy trade. Thinks rates will go higher next year, which makes him cautious. If that's the case for rates, a lot of the bond proxies like utilities and REITs are going to come under pressure. A bit more upside potential, but for a trade.